Moody’s Investors Service downgraded Silvergate Capital (New York Stock Exchange: YES) long-term issuer to Ca from B3 and its non-cumulative preferred shares to C from Caa3, all in non-investment grade territory.
The long-term issuer rating on its banking subsidiary Silvergate Bank has also been lowered to Ca from B3, while its long-term deposit rating was lowered to C from Caa3. The bank’s baseline credit assessment was lowered from b2 to caa3.
Also, ratings may be lowered further.
“The ratings downgrade is prompted by the company’s announcement on March 1 that it is evaluating its ability to continue as a going concern and is unable to submit its annual report on time,” Moody’s said.
In addition, Silvergate (SI) incurred additional investment losses, which had previously been recorded as non-temporary impairment of securities, when it sold some additional investment securities to fully repay its outstanding Federal Home Loan Bank advances.
“Another driver of the ratings action was governance,” Moody’s said. note saying. The delay in filing the annual report, “the asset-liability mismatch leading to higher-than-expected realized losses when selling investment securities, the possibility of being no longer considered well-capitalized, and increased legal and regulatory risks highlight important governance shortcomings”. “
“The BCA caa3 reflects our expectation that the company will continue to experience further declines in deposits, forcing it to continue selling securities, possibly at further losses,” Moody’s added.
Silvergate Stock (SI) gained 0.9% in regular session trading on Friday after a 57% drop on Thursday. In after-close trading on Friday, shares fell 1.7%.
On Thursday, shares of Silvergate (SI) plunged after the company said it was assessing the impact of recent events on its ability to continue as a going concern.
